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by Curt Hanson
Today the most competitive payment term that minimizes banking charges and eliminates documentation risks is open account. Open account terms are also the most effective way for an exporter to provide working capital support for representatives or distributors who are creating a market for their products. But what about the commercial and political risks of non-payment, and how do you finance those foreign accounts receivable?
Trade credit insurance allows an exporter to offer open account payment terms without placing their balance sheet at risk and maintains the ability to borrow against those accounts receivable. It also provides exporters a way to extend unsecured payment terms to their clients and shift the non-payment risks to a third-party insurance company.
There are a variety of reasons why trade credit insurance is an important tool for a company, including:
*It allows you to use credit as a marketing tool without adding risk to your balance sheet.
*It's a low-cost alternative to letters of credit.
*It protects company assets against spurious actions by a foreign government.
*It allows you to quantify maximum potential credit loss exposure.
*It serves as catastrophic loss protection against unforeseen events.
*It protects cash flow and increases borrowing capacity.
*It can be combined with financing programs to improve cash flows and performance ratios.
Trade credit insurance is a proven product whose history of supporting trade dates back more than 100 years. The trade credit insurance market developed much earlier and much more rapidly in Europe due to geography as much as competition. There are many smaller countries with their own political and legal systems and, in many cases until 2002, their own currencies. In order to expand their business European companies were forced into developing their export business much sooner than their U.S. counterparts. To accomplish this they had to offer more competitive payment terms.
U.S.-based companies have the luxury of a much larger domestic market and, in many cases, the availability of better technologies and more products. Because of this they were slower to expand into international markets, and that eventual expansion was much more deliberate and reliant on traditional bank trade products such as letters of credit. In addition, until about 15 years ago, many U.S.-based companies had limited access to workable trade credit insurance products.
In today's truly global marketplace companies are comfortable selling to buyers most anywhere, and they are facing competition from other suppliers from around the world. The ability to offer competitive terms is a requirement for any company to effectively compete. The trade credit insurance market has evolved and expanded to meet that demand. Companies today have many cost-effective alternatives.
Currently there are about nine private insurers active in the trade credit insurance market. In addition the U.S. government provides insurance through the U.S. Export-Import Bank. This mix of private and public insurers provides many different policy types and coverage options. A specialty broker plays a vital role in the insurance process. They can serve as your independent advocate helping you identify the best options for your particular situation. An independent specialty broker works for the export company; not the insurance company. Best of all, these brokers always provide their services at no cost to the exporter.
| Product Model | Inside Diameter | Outside Diameter | Thickness |
| 17TAB04DB-2LR NACHI | 17 | 47 | 15 |
| 15TAB04DB-2LR NACHI | 15 | 47 | 15 |